Implied Employment Contracts

What Factors Can Be Cited as Evidence of an Implied Employment Agreement?

In Texas, as in most states, employment is considered to be at will—the vast majority of people do not have any type of written agreement setting forth the terms and conditions of employment, benefits, termination and other matters. In an employment at will state, an employment relationship can be terminated at any time, and for any reason, provided it is not in violation of a valid employment agreement, or in contravention of law or public policy. Though many wrongful discharge or termination lawsuits allege breach, or violation, of a written agreement, you can also seek damages or compensation if you can show violation of an implied employment contract.

What Is an Implied Contract?

An implied contract is one that has not been memorialized in a written document, or witnessed in an oral agreement, but is instead suggested by the actions and/or statements of the employer and employee during the ordinary course of employment. Those actions/statements must be such that a reasonable person would conclude that employment is no longer at will, but is pursuant to a contract. It’s important to understand that parties may enter into an oral employment agreement—it may simply be difficult to establish the terms of such an agreement.

As a baseline, to create an implied employment contract, there must be language that states or indicates that the employee cannot be terminated without good cause (contrary to the rights of an employer in an “employment at will” situation).

What Are the Conditions that Suggest the Existence of an Implied Employment Contract?

Implied employment contracts are customarily created by the conduct of the parties:

• Whether the employer made verbal or written statements to the employee indicating that his/her job was safe, as long as there were no violations of company policy
• Language in a personnel manual or employee handbook that specify the types of infractions that can lead to discipline or termination, including progressive discipline
• Whether, in practice, the employer only terminated prior employees for cause
• Whether the practice in the industry is such that a person with the experience and qualifications of the employee would be considered protected by an employment contract

It’s also important to understand that the courts will give more weight to the actual nature of the relationship between employee and employer, rather than any language in an employee handbook or personnel guide. Accordingly, an employee may have an implied contract even though the handbook indicates that all workers are governed by employment at will principles.

Contact MCIS Law

At MCIS Law, PLLC, in Stafford, we provide comprehensive counsel to businesses in southeast Texas. For a confidential consultation with an experienced and knowledgeable lawyer, email us or call our office at (346) 297-0121. We accept all major credit cards.